Major League Baseball says it has paid millions of dollars in insurance every year to avoid financial catastrophe–and now that COVID-19 has caused one, insurers are refusing to pay out.
Major League Baseball is suing its insurance providers, claiming they have refused to reimburse billions of dollars in losses caused by the novel coronavirus.
According to CNN, the lawsuit was filed in mid-October by the baseball commissioner’s office, MLB’s entertainment media services, MLB Network, and Tickets.com.
Furthermore, all 30 of Major League Baseball’s teams have signed the suit as co-plaintiffs. Collectively, they claim to have suffered massive property and brand damage alongside “time element”-related losses.
In its complaint, Major League Baseball asserts that it purchased “top-shelf All Risks Policies” to protect its business—and baseball—against “the risk of catastrophic economic losses.”
The coronavirus—coupled with state-by-state restrictions on movement, sports events, and venue capacities—has purportedly cost MLB billions of dollars in damages. Baseball officials say they have been paying massive annual premiums for decades to avoid the financial fallout of any similar event.
“Baseball paid millions of dollars in premiums year after year because it deliberately bought broad, more protective coverage,” the lawsuit states. However, insurers have “very publicly refused to live up to their contractual obligation to pay what they promised.”
The lawsuit notes that coronavirus is unique in the way it has affected baseball. The sport’s fans, after all, drive its revenue, from ticket sales to branded-apparel purchases.
Major League Baseball says that, in the past, fans have supported its signature sport “through two world wars, and a host of other local, regional, and global crises,” because “whenever America faced a crisis, baseball—and attending baseball games—was a common bond that united the country.”
However, the pandemic’s very nature has effectively prevented fans in many places from actually attending games or otherwise engaging with the MLB’s business model. Because of novel coronavirus and government-mandated closures, professional baseball teams have had to cancel more than 1,500 games.
The result, notes CNN, is the shortest-ever professional baseball season on record.
“COVID-19 forced the Clubs to play the entirety of this shortened season without the core: fans in the stands,” the suit says.
In total, MLB estimates that it lost massive amounts in revenue from ticket sales, concessions, parking, and merchandise. They also claim to have suffered at least $1 billion in losses in media broadcast rights resultant from game cancelations.
“Due to COVID-19, the Major League Baseball entities, including those of the 30 Major League Clubs, have incurred significant financial losses as a result of our inability to play games, host fans and otherwise conduct normal business operations during much of the 2020 season,” the lawsuit says. “We strongly believe these losses are covered in full by our insurance policies, and are confident that the court and jury will agree.”